During the past fiscal year ended in March 2009, economic conditions in Japan worsened significantly, with exports and private capital investment, the twin motors of growth, plunging as global financial turmoil and deterioration in the real economy exacerbated each other.
    In the construction industry, private sector capital investment declined markedly as the deteriorating economy created perceptions of excessive capex levels. Public sector construction investment continued to decline, and the overall business environment for the construction industry remained difficult.
    Amid this harsh environment, bookings were well down year-on-year. However, net sales was down only slightly, and recurring profit* rose, despite exchange-rate losses, on better project profit margins. The Company posted net income during the reporting period, after the net loss of the previous year.
    The total value of orders fell 31.3% year-on-year to ¥276.7 billion due to significant declines in numbers of projects in Japan and overseas and fewer real estate projects.
    Construction orders fell 31.6% year-on-year to ¥260.1 billion including a 54.6% decline in overseas project orders to ¥21.2 billion, and a 25.1% decline in real estate project orders to ¥16.6 billion.
    By construction business sector, civil engineering orders declined 6.7% year-on-year to ¥101.2 billion, and orders in building operations fell 41.6% to ¥158.9 billion. By client type, the value of orders placed by the public sector fell 32.7% to ¥60.2 billion, and private sector orders decreased 31.3% year-on-year to ¥199.9 billion.
    Net sales declined 1.3% year-on-year to ¥408.9 billion on a non-consolidated basis.
    Net sales of construction operations edged up 0.1% to ¥392.3 billion including a 79.5% increase in overseas project revenues to ¥42.0 billion, while net sales of real estate operations declined 25.1% to ¥16.6 billion. By business type, civil engineering operations were up 26.4% year-on-year to ¥144.3 billion, while net sales of building operations slipped 10.7% to ¥248.0 billion. By client type, orders from the public sector increased 22.2% year-on-year to ¥114.5 billion, and private sector projects slipped 6.9% to ¥277.8 billion.
    As a result of the foregoing, the year-end order backlog declined 22.0% year-on-year to ¥467.3 billion.
    Turning to earnings on a non-consolidated basis, gross profit rose 19.6% year-on-year to ¥27.7 billion, and operating profit increased 196.7% to ¥6.3 billion. Net income came in at ¥1.7 billion compared with a net loss of ¥3.2 billion in the previous term.
    On a consolidated basis, net sales declined 2.0% year-on-year to ¥424.0 billion, and net income for the period came in at ¥2.6 billion, compared with a net loss of ¥3.0 billion in the previous fiscal year.
    The Company declared a total annual dividend of ¥4 per share.

* Due to reclassification, recurring profit does not appear on the statements of operations.

Prospects remain gloomy in the construction industry due to significant erosion of corporate profitability and fears of further deterioration in the Japanese economy. Against this backdrop, we expect a further sharp drop off in private-sector capital investment. With regard to public sector investment, we expect to benefit from measures under the supplementary budget, but the environment for orders is set to remain difficult.
    Amid such adversity, the Company would like to express its deep regret over an issue of compliance and corporate governance. We undertake to ensure no recurrence of such an event and rigorous legal compliance in future, so as to restore confidence in the Company.
    In light of the exposure of significant failings in internal controls relating to financial reporting, we plan the following measures to prevent any recurrence and improve our record in this area.

Measures
Corporate governance
1) Improvement of internal control system
2) Ensuring the Board of Directors functions more effectively and efficiently
3) Improvement of risk management system
4) Complete reorganization of the Company
5) Reform operations under the “Re-Birth Nishimatsu 21 Project”
6) Revision and expansion of in-house regulations

Thorough compliance awareness
1) Amendment of the corporate philosophy and establishment of a basic compliance policy
2) Strengthening the compliance system

    The corporate governance and compliance issue has become a drag on earnings for Nishimatsu. We are now facing difficulty meeting targets in the next medium-term management plan, Future Plan 2010, for fiscal 2008-2010, from the initial year onward. For this reason, we have replaced it with the Nishimatsu Re-Birth Plan 2009, through which we plan to shore up the basis of operations to rebuild confidence and improve earnings performance through a better profitability strategy.
    I am confident that all employees will rally round in the endeavor to restore confidence, and take every measure to prevent a recurrence of the recent corporate governance and compliance issue, to bring about a renaissance of the Company’s fortunes.
    We have declared May 15 as the “day of the rebirth of Nishimatsu” to ensure that in years ahead this issue is remembered and reflected upon by all employees of the Company, from senior executives down to construction-site workers.